QUESTION: Secretary Clinton, thank you so much for taking the time to speak with us. Last week, you gave a major speech on internet freedom and security and you called on American technology companies to take a stand by refusing to participate in the censorship of cyberspace. Given that China, which is the world’s biggest internet market by users, imposes censorship by law, are you suggesting that companies like Microsoft and Yahoo! should just pull out of that market?

SECRETARY CLINTON: Well, what I said in the speech is that I thought it should be carefully evaluated with respect to the businesses that operate in any setting where either censorship or interference with their businesses occur. Obviously, these are decisions that individual businesses have to make for themselves.

But it is important to point out that we cannot afford in today’s interconnected world to have too many instances where businesses are constrained, where information is not flowing freely, where companies’ accounts can be hacked into. So this may be just the beginning of what will be a vigorous discussion globally about how to deal with these challenges.

QUESTION: All right. Now, the other day, Microsoft chairman Bill Gates seemed to almost contradict your message from your speech. I was wondering if he had heard your speech, because he said that China’s internet censorship was actually very limited. And you and the U.S. Government have repeatedly expressed concerns about China’s monitoring of human rights activists and even the apparent theft of their personal information allegedly in the Google case. Is Gates somehow missing the bigger picture here beyond profits?

SECRETARY CLINTON: Well, I don’t want to second-guess or in any way assess from a distance what Bill Gates meant. But I do think it’s important to recognize that my speech and Google’s complaints were not restricted to what we think of as censorship – in other words, information not being available through the internet or not being transmitted by the internet.

It was, as you say, a broader concern about the actual interference that was alleged against users of email, and that raised a second set of serious questions. So I think, as I said, we want to get everybody’s opinion on this. We want to begin to discuss it. That was one of the reasons for my speech, because I think we’re entering into a time period where what happens in cyber space is going to be increasingly important to not only national security, but commercial interests, personal privacy. And I don’t think we yet know how to handle this.

QUESTION: Now, would export controls play any role in this? Is the U.S. Government thinking about export controls on internet technology or programs that help hackers inadvertently?

SECRETARY CLINTON: Well, this is an area that we are looking at very closely because there are some quite legitimate questions about our export control regime. It goes from the absolutely ridiculous of preventing the export of bolts and nuts and screws for certain military equipment that have no military purpose in and of themselves to questions that are legitimate about encryption technology.

So you may know that the Administration has launched a review of export control laws and regulations. The State Department, Defense Department, Commerce Department are leading this effort. So we’re going to be exploring how do we streamline and improve our export control authorities and eliminate restrictions on items that are not militarily or otherwise harmful, but not cast such a wide net as we do today.

QUESTION: All right. One last question on this: The Chinese Government has insisted that it has nothing to do with the hacking. Has Google shared any evidence with the U.S. authorities that proves China was involved in hacking either its accounts or that of more than 20 other U.S. companies? And if so, what can the U.S. Government do if China simply refuses to investigate?

SECRETARY CLINTON: Well, Indira, I think this is one of those unexplored areas that we wouldn’t have even been talking about five or 10 years ago. We called for a transparent examination of what did happen. The response back is that there wasn’t any official action. I can’t sit here today and judge that. I think there’s some uncertainty about who did what. But my larger point is that it’s in everyone’s interests to begin to try to hammer out some rules of the road.

As I said at the speech earlier this afternoon at L’Ecole Militaire, we today have a company that’s a U.S. company making these claims about what happened to them. In five or 10 years, it could be a Chinese company or a Russian company or an Indian company. So just because we’re concerned, understandably so, that it was an American company doesn’t mean that others shouldn’t be concerned about what might come down the road affecting their own company.

So it’s like when air travel started so many decades ago. Finally, people got around to having international rules so that you wouldn’t have airplanes running into each other in the sky. There’s just a growing awareness that the control and the regulation of cyber space so that we keep the internet as free and open as possible is really in everybody’s interest.

QUESTION: There have been widespread reports that in cases involving Russia where there was hacking, that some of the hacking actually involved mafia elements who might have been doing it in collusion with the government. So that’s one of the theories that’s being explored in the China case. I don’t know if that’s something that law enforcement has discussed with the State Department, the notion of Chinese mafia involvement and the sort of, you know, unseen hand of the Chinese Government in that case.

SECRETARY CLINTON: Well, we are, as you probably know, taking cyber security very seriously. The President has appointed a cyber security director. We are reorganizing within the State Department to be on top of this issue and begin thinking through all the different legal and regulatory, diplomatic, and commercial implications.

So I don’t want to characterize any past incident because as of this time, we have a number of suspicions or anecdotes or concerns, but at the end of the day, what I’m really interested in is making sure that we try to have some international agreement on how we will protect information flow and how we will join together to punish wrongdoers. I mean, it could be a government today, an al-Qaida tomorrow, and – or another terrorist group that is local to a certain country. So everybody needs to start taking this seriously. That’s my overriding message.

QUESTION: All right. You’ve just come from a conference on Afghanistan at which Afghan President Hamid Karzai spoke about convening a loya jirga and inviting insurgents. What is the U.S. position on this? Because U.S. officials have told us that there is a distinction between reintegration and reconciliation, and that the U.S. isn’t about to make peace with Taliban leadership. So tell me how you see President Karzai’s plan.

SECRETARY CLINTON: Well, there is a distinction between reintegration and reconciliation. Reintegration refers to, just for the basis of this conversation, the foot soldiers, the folks on the battlefield who want to get off of it, who want to return to their village and resume a normal life. That literally is happening all the time.

The problem has been there’s not been an organized effort to provide protection and income substitution for the fighter who surrendered to a NATO ISAF commander and who then nobody knew what to do with. And in fact, over the last several years, Taliban have tried to come off the battlefield, they’ve been – they’ve surrendered, they’ve been accepted, they’ve been sent home, they’ve been – had promises made to them which haven’t necessarily always been fulfilled. And I think there’s a strong conviction on the part of our military commanders that there’s a real opportunity to accelerate the movement of Taliban soldiers away from the Taliban.

Reconciliation talks more about the political process where leaders would make peace. We see – you don’t make peace with your friends when you have a conflict. Leadership has to decide to resolve it. We see that all over the world. And so President Karzai is putting together some standards and descriptions of what that will mean, and we’re obviously very interested about how that comes out and have made clear that we want to protect the interests of the ordinary person. We want to honor the memory of not only our American soldiers, but the soldiers from every country, the soldiers of Afghanistan, others who have made a sacrifice. And I particularly am concerned about not doing anything that turns the clock back on Afghan girls and women.

So there are many aspects to this, but there always are. I mean, trying to resolve conflict is difficult, it requires a lot of patience, but the international community, including the United States, supports the objectives, but obviously, the details matter.

QUESTION: Now, one of those details is that the outgoing UN envoy in Afghanistan, Kai Eide, recently met with the Taliban leadership in, you know, a meeting that was kept quiet at the time. Is that something that you would consider a U.S. official participating in, something similar to that, to feel out what the Taliban leadership is thinking?

SECRETARY CLINTON: Indira, I don’t think it’s useful to speculate about what might or might not be done because so much of it depends upon assessments that can’t really be made from afar. Our military commanders are very committed to this process, growing out of their own experience in Iraq. They believe that the work they did in Iraq, which was both American military and civilian leadership led, helps to ensure the success of the surge. And it was kept quiet, it was done very thoughtfully, so I think it’s probably wiser not to be speculating about what we will or won’t do.

Obviously, our goal is to stabilize Afghanistan, transition security to the Afghan forces, and bring our troops home while we maintain an ongoing civilian diplomatic relationship with Afghanistan into the future.

QUESTION: Last question on Iran. All week, you’ve been pushing with partners and allies on a new sanctions possibility. I want to know – you made a very strong statement today about China needing to think about its long-term interests beyond the fact that Iran is the third biggest supplier of China’s crude oil. So tell me, what assurances have you gotten that now when France takes the leadership of the Security Council that you are going to go forward with sanctions? And related to that, what are your thoughts on the Senate having passed this new sanctions bill in Congress?

SECRETARY CLINTON: Well, first, it’s not a surprise to anyone that we’ve been working to gain support for pressure and sanctions along with other partners for a while now. Once it became clear that Iran was not going to be responding satisfactorily to our general offer of engagement or our specific offer regarding the Tehran research reactor, work began to try to shape the sanctions, design them so that they could be effective, talk about enforcement, and listen to the concerns of other nations.

That process is going on. There will be a concerted effort. Again, I’m not going to preview when, what, or how because I think that’s not productive. But it’s been reported widely that China has questions. They themselves have said that on various occasions. But up until now, they have been totally united with the P-5+1. And the arguments we have put forth to them are very clear that we think this is in the interest of international peace and stability to prevent Iran from moving forward with a nuclear weapons program, and that it’s in the interest of the nations discussing it, including China.

QUESTION: And on the Senate passing that bill through Congress, that second part?

SECRETARY CLINTON: Well, that’s not a surprise. I mean, the Senate is very concerned about Iranian behavior, and with good reason. It’s not only the nuclear program, as distressing as that is, but these recent activities where they basically are executing demonstrators and claiming that anybody who protests against the Iranian Government is in a war against God are extremely troubling. So the Congress – I’ve served in Congress, I know – wants to express strongly its disapproval of Iranian behavior, its support for human rights, and its belief that putting pressure on Iran can help change the regime and actually put international pressure to support the dissidents.

QUESTION: Madam Secretary, thank you so much for speaking with Bloomberg Radio today.